It measures the volatility of a security. Stocks exhibiting large changes in price as compared to an index like FTSE 100, on up as well as down side are considered to be more volatile and are assigned…
Download file to see previous pages...
Both the companies are listed under FTSE 100.
Under CAPM the calculation of cost of capital depends on the principle that the rate of return required on a security is equal to the risk-free rate of interest plus a risk premium, based on the following formula-
Therefore the beta of Sage Group as per calculations is less than the beta that has been published in Bloomberg site and the beta of Diageo Plc as per calculations is also less than that has been published in this site. There can be many reasons for this difference. Like in the case of data like beta that is reported by a site the calculations are more extensive. For the purpose of the calculations, the monthly returns relating to the last twenty four months only has been taken. But the beta estimation in Bloomberg is based on either daily returns or quarterly returns over a long span of time. Some sites base their calculations on the data since the stock inception. As the beta calculated by these sites is based on a longer span of time therefore they are more reliable as it covers a larger number of data points. So the difference in ‘time frame’ can result in different beta estimates. Some of the financial services use weekly observations while others use monthly observations whereas others base their calculations on the last day of trading.
Another reason for the varying beta is that they are calculated using different indices in the market. Some sources use Standard & Poor 500 as the benchmark index, some use Russell 1000, 2000 and others use Value Line Index. In such situations the best way is to choose which provides the beta for most of the companies in the guideline (Pratt & Niculita, 2007, pp.211)
It may be possible that the fundamentals of the company have changed over time in that case the beta that is calculated based on a recent period is more reliable (Pratt & Grabowski, 2008, pp.141). Based on this it can be said that the beta based on the recent period is more reliable as
...Download file to see next pagesRead More
Generally for publicly traded stocks the process of comparing the stock’s performance can be done much easier than a non public company. Traditionally individuals looking to invest in publicly traded company investors can use the price earnings ratio and eps.
So, the problem is how the information and concepts were structured. The graphical representations of the elements and the way they interact should have been presented in a more clear and concise manner. For example, the link between the value proposition and customer segment was clearly established.
The other bodies governing the Hong Kong Financial reporting operates as; Hong Kong Financial Reporting Standards (HKFRS), Accounting standards (HKAS) handling the related interpretations; while the section of stock exchange works under the financial listing rules appendices 14 and 23.
Seminal research works of Milton Friedman (1970) has forced the researcher in this essay to look deep on role of ethics and ethical decision making in financial institution or more specifically for banking industry. In the first part of this essay, the researcher will try to define the concept of free competition and business ethics in the light of research works of previous research scholars.
Manager's expertise like analysis, forecasting and budgeting plays a vital role in decision making. Managerial decision making is no doubt a complex problem-solving process; which consists of a definite series of stages (Garrison, 1985). Corporations expect from their key persons that they generate cash for the entity by their expertise and the decisions they make should be for the sake of the organization.
They are the foundations for ensuring a culture' of continuous performance improvement and preparing the overall business for both the boom and recessionary periods which typify the economic cycles in which companies operate (Brown, 1996). The approach is derived from a concept called Balanced Scorecard', which was developed by Robert Kaplan and David Norton.
Borrowings include loans from financial institutions; corporate bonds etc. while shareholders funds include equity share capital, preference share capital, accumulated profits. However, the amount of risk involved in both the sources of financing differs.
Every enterprise, whether public or private, large or small, profit making or not is a financial concern. Most of its decisions involve finance. Success or failure of the decisions and hence the enterprise depends on the quality of its financial decisions.
The process of new product development process can be divided into three stages: the front-end, the development, and commercialization (Postma, Broekhuizen, and Bosh, 2012: 642). The frond-end phase is recognized to be the “fuzziest”
12 Pages(3000 words)Assignment
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Strategic and Financial Decision-making for FREE!